Mediation hearings for foreclosures to become Nevada law

CARSON CITY -- A bill that could keep as many as 17,700 Nevadans from losing their homes to foreclosure was signed into law Friday by Gov. Jim Gibbons.

Gibbons approved Assembly Speaker Barbara Buckley's Assembly Bill 149 that sets up mandatory mediation hearings between lenders and home buyers who are struggling to make payments on their mortgages.

Under the law, which goes into effect July 1, home buyers in default could request a mediation hearing with the lender. Forms to request these hearings should be available in a few weeks from the courts.

Supreme Court-appointed mediators would conduct hearings to try to work out new loan arrangements that would allow the buyer to remain in the home.

Lenders, however, are not required to agree to make better loan arrangements. Some, however, might agree to new loans in instances when they anticipate being unable to sell a foreclosed home for anything near the value of the current mortgage.

"There are some people in foreclosure status who need this kind of assistance," Gibbons said. "If this helps them, good. We are here to slow down the foreclosure rate in Nevada."

He noted that lenders and buyers already could voluntarily work out new loan arrangements, but the bill sets up a specific process to accomplish that objective.

Gibbons added the foreclosure rate would drop if taxes could be reduced on residents.

He wondered aloud how many more homes in Nevada will be lost to foreclosure because of the $1 billion in tax increases approved by the 2009 Legislature.

The glut of foreclosed homes in Nevada has caused home values to plummet. Last year, 77,000 homes were foreclosed upon in the state.

The costs of the mediation hearing between the buyer and lender cannot exceed $400, half paid by the lender, half by the buyer.

"It is not going to help everybody," Buckley, D-Las Vegas, said in a recent interview. "If someone has lost a job and they can't get a new job, it isn't going to help them. But it will help those able to afford a mortgage, just not one at the current rate."

Typically these buyers entered into "exotic" mortgages, such as adjustable rate mortgages that initially had a low interest rate but now are too costly for them, she said.

Virtually all banks and lending companies backed the bill during hearings.

The Nevada Supreme Court in June will set up rules for mediators, create forms for buyers to request mediation hearings and name people to serve as mediation administrators in each county.

During a hearing, Chief Justice James Hardesty said more than 300 lawyers and 22 senior judges have signed up to serve as mediators.

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.